RE: "tariffs are tools by which we can set up the rules."
Sure they are, just like farm price supports are 'tools', and every other form of special interest give-away.
My only point was that there are useful tools... and than there are tools which 'work' by shooting ourselves in the foot.
For every 'steel job saved' by tariffs we will lose 5 to 10 other jobs in the consuming and trade industries. The net effect is to tax consumers without having to actually vote for tax increases... it's a backdoor tax increase and will reduce our GNP.
And it won't save 'steel jobs' by removing the economic incentive for the most unproductive steel producers to invest in upgrading their physical plants.
Germany, for example, can undercut our prices on certain high quality steel products - despite the fact that their wage costs in their steel industry are much higher than ours. The difference is that German steel producers have continually invested in high-tech process improvements... while our bloated and antiquated mills in OH, Penn, WVA have not invested in updating their own mills in years.
Under this new tariff regime, although the industry will have 'breathing room' (read that as: guaranteed profits for the owners) to make needed investments... there is no guarantee that they WILL, and no incentive to encourage them to. Rather, when the 'temporary' tariffs are scheduled to expire, the industry will simply ask for more handouts.
This was a political move by the President to secure votes in midwestern states - which his advisors tell him he needs to win re-election - but not smart economics.
If he really wanted to 'save jobs' it would have been far cheaper to just give all the laid-off midwestern steel workers lifetime annuities or some form of welfare and 'transfer payments' and job retraining... instead of raising the cost of business in America and loading another tax on the backs of America's over-burdened consumers.
Nope, it's pure politics, it's bad economics, it's a tax, and it smells. The only ones bailed out are the fat cats who refuse to invest in modernizing their own companies.
Note: not all steel producers were having trouble competing. The more modern producers (Nucor, etc.) who had invested in new physical plants - unlike the midwestern dodos - were gaining market share... but they won't see any benefits from the new 'tariff-tax'.
Unfortunately, the tariffs that were levied benefit only our most unproductive producers - not the modern efficient ones - and will produce exactly the wrong economic effect in the industry: it will delay needed rationalization, and benefit the weak sisters, not the forward looking ones.
Pure politics. |
